BP shut out of U.S. contracts: Feds cite deadly blast, poor response

BP, which has agreed to plead guilty to criminal charges in connection with the nation's worst offshore oil spill, was suspended from new government contracts on Wednesday, the Environmental Protection Agency announced.

In suspending the company, the federal agency said BP had displayed a "lack of business integrity” in connection with the Gulf of Mexico oil disaster. More than 200 million gallons of oil flowed into the gulf after an explosion and fire destroyed the Deepwater Horizon oil rig in April 2010. Eleven people died in the blast.

The suspension doesn't affect current contracts held by the company, the EPA said in its announcement. But the company and its affiliates won't be allowed to bid on new contracts "until the company can provide sufficient evidence to EPA demonstrating that it meets federal business standards," the agency said.

"EPA is taking this action due to BP's lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response,” the agency statement said.

In an announcement from its corporate headquarters in London, BP stressed that the EPA's action does not affect any existing contracts that the company has with the government and that BP expects the suspension to be lifted soon:

"The EPA's action is pursuant to administrative procedures providing for discretionary suspension until a company can demonstrate 'present responsibility' to conduct business with the U.S. government. BP has been in regular dialogue with the EPA and has already provided both a present responsibility statement of more than 100 pages and supplemental answers to the EPA's questions based on that submission.

"The EPA has informed BP that it is preparing a proposed administrative agreement that, if agreed upon, would effectively resolve and lift this temporary suspension. The EPA notified BP that such a draft agreement would be available soon," the company stated.

The suspension was not unexpected after BP agreed earlier this month to plead guilty to 14 criminal charges and pay more than $4.5 billion in fines to the government and the Securities and Exchange Commission. Among the charges, BP agreed to plead guilty to 11 felony counts of misconduct or neglect in connection with the 11 people who died in the explosion. It also agreed to plead to guilty to one count of obstruction of Congress.

The company is discussing with the Justice Department when it will formally enter its guilty pleas in federal court.

The announcement of the suspension comes on a day when the federal government is holding an auction for new oil leases in the Gulf of Mexico. BP will not be allowed to bid until the suspension is lifted.

The action also comes the same day that two BP rig supervisors and a former executive were scheduled to be arraigned on criminal charges stemming from the explosion and spill.

BP well site leaders Robert Kaluza and Donald Vidrine are expected to enter pleas on manslaughter charges in the death of the 11 rig workers. A federal indictment accuses them of disregarding pressure readings that were warnings of trouble.

A separate indictment charges former BP executive David Rainey with concealing information from Congress about the amount of oil that was spewing from the well.